The ice-cream market is evolving with new and unusual flavours, textures and fusions, while a growing consumer base, product acceptability, and stiff competition is pushing operators to strive for competitive advantages through innovations in product offerings and delivery of service
The ice-cream/frozen dessert category has witnessed substantial growth in the recent past. Up to a decade ago, the category was largely limited to ice-creams with traditional flavours such as vanilla, chocolate and strawberry, along with some variants like kesar pista, mango, elaichi, traditional kulfi, etc. During the past decade, the category has grown with an array of innovations in ice-creams – now the main subcategory – and new subcategories like frozen yoghurt are coming up.
Ice-cream, which was considered an indulgent category in the past, has now evolved to a stage where it is largely and happily perceived as a snacking option by consumers. This change in perception has come about thanks to increasing disposable incomes and greater discretionary spending. Also, the growing reach of the media has allowed operators in this category to expand their range and recall value. The change in the perception of consumers has allowed the category to grow in volume. Ice-cream, as a category, has been growing at a healthy CAGR of ~10-15 percent. Growth of the industry can be attributed to large investments in advertising and infrastructure development, diversification and widening of product portfolio to target different consumer segments, and entry of multinationals.
The category’s growth has provided impetus to international and regional players to foray into the market. National operators like Amul and Mother Dairy, and international players like Unilever, Cream Bell, Movenpick, etc, occupy the center stage, and are followed by many regional operators. Amul is the market leader in the ice-cream category making up almost one-third of the market, followed by Hindustan Unilever and Mother Dairy. The growing consumer base, product acceptability, and stiffening competition has pushed operators to strive for competitive advantages through innovations with respect to product offerings and delivery of service.
Today, the plain, good old ice cream is being consumed alongside boutique offerings such as gelatos. Consumers are willing to experiment with unusual flavours and combinations. These quality conscious consumers also want smoother, creamier products. Simultaneously, gourmet flavours are gaining in popularity and are also the triggers for brands seeking premium positioning. The premium ice-cream market has been expanding on the back of growing disposable incomes of consumers and their desire to try out newer, richer, tastier products. Pegged at Rs 500 crore within the overall ice-cream market, the premium segment is occupied by international brands such as Häagen Dazs and London Dairy.
Brands are offering better, tastier, and unique flavours and variants; their efforts are matched by the rising aspirations of consumers and their willingness to pay a premium. Besides ice-cream, frozen yoghurt is stepping up as a category within the frozen desserts segment.
Baskin Robbins serves more than 25 flavours in their exclusive stores. Popular flavours include Rum Punch, Mississippi Mud, Banana Caramel, etc. Nestlé’s Movenpick offers tropical fruit sorbets and sorbet-and-ice-cream combinations, while Amul has a wide range of mid-market and premium products, and has recently introduced the super-premium Crème Rich.
Vadilal has the largest range of ice creams in the country with over 150 flavours, sold in a variety of more than 300 packs and forms. The range includes cones, candies, bars, ice-lollies, small cups, big cups, family packs, and economy packs. Gujarat-based Havmore features flavours such as caramel biscotti, fresh mango, pink currant, pistoria, Tiranga ice candy and a truffle bar, in turbo cones, besides flavours with white chocolate, in addition to its paan and matka ice-creams, bubblegum-flavoured, lollypop ice-cream, Nutty Belgian Dark Chocolate, Kesar Malti, Classic Caramel, and Berry Blast. Creambell leads the ice cream market with its innovative creations every summer, and its wide range of variations. Early this year, it introduced Saffron Creamballs with an authentic Indian taste in its portfolio of flavours such as Raj Bhog, Shahi Kulfi and Shahi Kheer.
Kolkata-based Fresh & Naturelle has introduced sandalwood, Japanese green tea, and Kolkata meetha paan flavours. Natural Ice Cream, which is largely marketed in Maharashtra and Karnataka, offers custard apple, and the festival-oriented Makar Sankranti Special containing sesame seeds and peanuts. Movenpick has plans for a masala chai flavoured ice-cream. Another innovation is the introduction of diet-friendly ice creams (as part of brands’ premium range) such as low-fat and sugar-free ice cream, as well as ice cream cakes.
HUL, a key player in the organised ice-cream market rolled out its premium ice cream brand Magnum nationally in February after test-marketing it in Chennai for almost a year. Mother Dairy has introduced fruit-based drinks and fruit juices that have 17 to 40 percent fruit content, and is set to launch frozen desserts called sorbet made from sweetened water, flavouring and fruit pulp.
Internationally, General Mills has launched veggie-flavoured Haagen-Dazs ice cream in Japan. These include Tomato Cherry and Carrot Orange flavours. Japan’s Mikawaya of the Mochi Ice Cream brand, has introduced Black Sesame, Cookies & Cream, Matcha Green Tea, Mint Chip and Plum Wine, bringing the company’s total to 12 flavours. USA-based So Delicious® Dairy Free replaced the traditional wooden sticks with plant-based, lickable, compostable sticks developed by Cardia Compostable technology.
The frozen yoghurt category, estimated to make up 10-12 percent of the Frozen Desserts/Ice-cream market, is witnessing faster growth than the overall market at a CAGR of 15-16 percent, and is expected to more than double in size over the next five years. The entry of multinational players like Red Mango, Pinkberry, Yogurberry, etc, is likely to widen the market and push its growth beyond current estimates.
Consumers changing their preference, and being more inclined towards healthy and premium options, have encouraged international brands like Red Mango and Yogurberry, which have ticket values approximately double the ticket value of domestic brands in the similar segment. Similarly, in the ice-cream space as well, players like Swensons, with premium ticket value, are confident of further expansion within the Indian market.
Costs and efficiencies
Increasing dairy costs are ramping up transaction costs for traditional ice-cream players, which are in turn pushing up prices at the consumer end. However, traditional preferences, such as milk-based and candy ice creams, and the wide distribution network of the milk-based ice-cream players keeps them stable enough to sustain their market share despite the new and emerging trends of gelatos and frozen yoghurts. Also, as the ice-cream business is volume-driven, the price shift is widely distributed and does not majorly pinch the consumers financially. Mother Dairy, the third largest ice cream maker after Kwality Walls and Amul, has invested heavily in increasing capacity, upgrading technology, and in ice cream carts to increase reach.
Ice creams and frozen desserts are a fast-emerging segment is retail service with brands like Cocoberry, Red Mango, Kiwi Kiss, and Yogurberry selling flavoured/frozen yoghurt in signature flavors through exclusive/standalone outlets. Such outlets are present in the premises of colleges, schools, office canteens, airports, five-star hotels, and as independent kiosks.
All of this provides an opportunity for frozen yoghurt and gelato brands not only to educate consumers on the merits of their products, but also to expand their manufacturing and distribution capabilities, and thus capture an untapped market. However, to increase their market share, ice-cream manufacturers need to optimize their production systems, packaging technologies and cold chain management, ensure compliance with quality standards, and get their marketing mix right.
Although the per capita ice-cream consumption is lower in comparison to other major markets, it has gone up to 300 ml against the world average of 2.3 litre. The industry is growing at a CAGR of ~10-15 percent. This growth is, and will, supply momentum to ice-cream consumption, especially in the branded and new/innovative categories. With the growing consumer base, increasing disposable income, and greater trend toward eating-out, the market stands poised to incorporate bigger players and more novel concepts. The influx of international brands in the country is driving competition, and the industry is set to grow on the back of partnerships and franchises of brands to widen reach and distribution.